Weekly summarization of steel market in China, Aug 19-26

Weekly summarization of steel market in China, Aug 19-26

1. Construction steel products: 1) East China: The construction steel market continuously presented a slight downward trend in Shanghai last week. By last Thursday, the prevailing transaction price of 6.5mm diameter high speed wire rod was RMB 3'360/ton ($415/ton) and that of 18-25mm diameter rebar was RMB 3'170/ton ($392/ton) in the Shanghai market. These prices represent drops from the previous week of RMB 10/ton for wire rod and RMB 50/ton for rebar. East China has witnessed a slight price drop for construction steel products. For instance, in Hangzhou, wire rod decreased RMB 50/ton to RMB 3'350/ton ($414/ton) and rebar decreased RMB 60/ton to RMB 3'250/ton ($401/ton) last week. Other markets saw declines between RMB 20-40/ton. 2) Middle South China: Construction steel prices showed a stable dropping trend. Specifically, the transaction price of wire rod and rebar in Guangzhou fell RMB 60/ton and RMB 40/ton to RMB 3'420/ton and RMB 3'490/ton due to increasing inventories. Moreover, wire rod prices declined by RMB 50/ton in Nanning, and by RMB 10-20/ton in other markets. 3) North China and Northeast China: Overall, construction steel market prices presented a decreasing trend in north and northeast China. North China suffered a comparatively larger decrease. For example, prices of wire rod and rebar in Beijing dropped RMB 50/ton and RMB 80/ton to RMB 3'300/ton and RMB 3'260/ton, and the decrease extent varied from RMB 30/ton to RMB 80/ton in other markets. 4) Southwest and Northwest China: Construction steel saw slight price cuts in southwest and northwest China, with the exception of Urumchi. Prices of wire rod and rebar decreased RMB 50-60/ton to RMB 3'350/ton and RMB 3'300/ton in Chengdu. In Xian, wire rod prices dropped RMB 10/ton to RMB 3'390/ton, while rebar prices stood at RMB 3'200/ton. By Thursday, the average price of 6.5mm diameter high speed wire rod and 18-25mm diameter rebar was RMB 3'380/ton and RMB 3'294/ton in 28 major Chinese cities, down RMB 36/ton and RMB 35/ton over last weekend. Affected by the weakening construction steel demand from the real estate industry, construction steel products inventories have been growing in major domestic markets recently. At present, China's construction steel market is under pressure from increasing inventories and tight capital for procurement. Thus, it is forecasted that the recent construction steel market price will continue the trend of slight declines. 2. Medium plate: The prices of medium plate continued dropping in China last week, with comparatively large decreases in the east, north and southwest. By last Thursday, the average price of 8mm and 20mm medium plate reached RMB 4'355/ton and RMB 3'867/ton in 28 major Chinese cities, down RMB 54/ton and RMB 53/ton from the week before. The current domestic medium plate market suffers severe pressure from concentrated productivity releases. Steel mills also suffer from high inventory and sales pressure in general, thus it is predicted that China's medium plate market will mainly experience slight price decreases in the immediate future. 3. CR/HR sheet/coil: Overall, the CR/HR coil/sheet market experienced slight fluctuations in China last week. In detail, the CR sheet/coil market price has obviously decreased in east China, but has been stable in other markets. Moreover, HR sheet/coil price decreased by a small amount in east China, but rose somewhat in south China. Prices for HR remained stable in other markets By last Thursday, the average price of 1.0mm CR sheet, 2.75 HR coil and 5.5 HR coil was RMB 5'734/ton, RMB 4'052/ton and RMB 3'748/ton in 28 major Chinese cities, dropping RMB 10/ton, RMB 2/ton and RMB 2/ton respectively from last weekend. Although Baosteel largely reduced its steel products price for the fourth quarter, their ex-factory price will still be higher than market price. Currently, on the one hand, newly increased productivity of CR/HR sheet/coil has been continuously released even though the demand is not there. This means that the newly operated steel mills have had to implement a low price strategy to occupy the market. On the other hand, some domestic steel mills will enter a concentrated overhauling stage, while the CR/HR sheet/coil price has stably risen in international market. This means that China's CR/HR sheet/coil market is facing a dilemma at the moment. Considering that recent CR/HR sheet/coil market transactions have not become better and that domestic inventory has continuously risen, it is estimated that CR/HR sheet/coil prices will still present a slightly decreasing trend in China for the immediate future. 4. Large and medium section products: The large and medium section market was generally stable in China last week, with price rises in some markets. By last Thursday, the average price of #5 Q235 angle, #12-16 Q235 channel and #25 Q235 I beam was RMB 3'393/ton, RMB 3'345/ton and RMB 3'585/ton respectively in 28 major Chinese cities. These prices indicated rises of RMB 4/ton, RMB 5/ton and RMB 2/ton over last weekend. At present, construction steel structural enterprises are dealing with tight capital situations and decreasing profits in general. Flat products prices have been relatively stagnant, with large consumption of profiled plate. This means that the H beam market price has remained stagnant; prices of small spec H beam in particular prices have been lower than that of rebar. It is estimated that China's large and medium section steel market will still operate stably for the immediate future, affected by the softening construction steel market trend in China.